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Spending Premier League money

April 20, 2017by J Hutcherson

By J Hutcherson (Apr 20, 2017) US Soccer Players - There's a long tradition in professional sports in trying to figure out how the owners make their money. In America, the focus shifted from owners solely committed to their club to entrepreneurs and corporations with a variety of interests. Sometimes, that includes a variety of teams. The National Football League used to have strict rules about their owners also owning teams in other sports. That's what spouses were for, eventually breaking down that hesitance to think that one person could own teams in multiple leagues.

It's different in European soccer. There the leagues lack the basic salary controls that have turned North American teams into revenue generators. There's more to the North American financials. The lucrative regional TV deals can encompass territories larger than European countries. Transfer fees are a rarity. Local municipalities are willing to pay for regularly scheduled new stadiums.

For European soccer, even massive amounts of revenue can crash into having to pay to contend. Those transfer fees add up. Making a lot of money as a global soccer brand means spending a lot of money to maintain that status. That's why it's not surprising that the richest European soccer league of all, England's Premier League, is having to spend a lot of money.

According to the latest report from Deloitte, Premier League clubs made $4.6 billion dollars last season. The combined losses were $110m more than that massive amount of revenue.

There are reasons, of course. With one massive spending spree in mind, it's worth asking if we'll see multiple Premier League seasons when at least one club doesn't throw its money around. The rise in transfer fees along with every club in the world well aware of the Premier League's spending power doesn't bode well for a conservative approach. There's a long list of current and former Premier League clubs well aware of what normally happens when you plan for a season at a discount.

Where this leaves the Premier League clubs as businesses is a fair question. There's an ideal among English soccer fans that the money they put into the club exits in the form of making their team more competitive. That was part of the backlash to the Glazier takeover at Manchester United. They financed that move in a way that's common enough in North American pro sports. In England, it was scandalous. The club spending the most in the Premier League last season was Manchester United. No surprise, with their ownership continuing the tradition of putting money toward trophies.

There's an obvious problem with that approach, one embodied by the current version of Manchester United. If multiple Premier League clubs are willing to spend, it lessens that advantage. Manchester United is one of several willing to break a transfer record. The approach and the personnel aren't unique. Neither is seeing United out of the Champions League places.

For ownership that isn't interested in funding a club's losses season after season, there's a clear breaking point. The point of Financial Fair Play was to bring the benefactor model to an end. That's when the owner funds whatever the club spends without the club taking on real debt. That's the kind of debt with an expectation of eventually paying back. Instead, the Premier League shook off Financial Fair Play for the most part, continuing their version of business as usual.

The rise in Premier League broadcast fees across the world is only raising the ceiling on what Premier League clubs have to pay for players. Transfer fees aren't set by a third-party. The selling clubs are well aware that even mid-tier Premier League teams now have more money to spend.

So this is what the Premier League's success brings. A marketplace they can dominate through their spending power, but with no guarantees that spending even works. Meanwhile, through player development and spending on other players, the rest of Europe is putting their teams in the Champions League semifinals. That's also not something easily ignored by the Premier League and their elite.

Whether or not we reach the point where enough Premier League teams start to openly question what kind of business they're in is an open question. It makes sense that they would, but that's nothing new. Instead, it's their odd form of business as usual, even when they're paying way too much for it.

J Hutcherson started covering soccer in 1999 and has worked as the general manager of the US National Soccer Team Players Association since 2002. Contact him at jhutcherson@usnstpa.com.